As FMCG companies embrace the digitalisation of B2B sales and service – should they be building their own e-commerce platforms or buying off-the-shelf technology?
The answer is very clear, according to Scott Rigby, chief technology advisor and principal product manager at Adobe: if you are building your own you risk cost overruns, compromised security, and delays in going to market – and you may lose ground to your competitors who are using more nimble, easily adaptable solutions.
“A lot of FMCG businesses are early adopters of technology, some are later. But all of them are either bringing old technology with them or trying to mix it with newer technology and often they don’t really talk to each other.
Or it may be that the companies have adopted new technology and they’ve tried to adapt it themselves and ended up creating this Frankenstein solution which does not deliver improved experiences for their customers – and they cannot figure out why it doesn’t work.”
Right now, a big focus of FMCG companies is digitising their B2B capabilities. These companies are looking at how they can develop buyer portals that let wholesale vendors order and sell to cafes or grocery stores, for example, in a specific region, or if they have a direct relationship with a cafe or a service station, how they can order online, streamlining the purchasing process.
“B2B is a massive focus,” explains Rigby. “Companies are asking how they can convert a typically legacy face-to-face, handshake kind of relationship into digital commerce. Part of that is because the demographic of the people that are ordering is rapidly getting younger. Millennials now make up 47 per cent of the procurement workforce and the early Gen Zs are now entering the procurement workforce. These people want the same personalised experiences in their work lives as they get online in their personal lives.
“So streamlining the ability to be able to order on an app or whatever platform it is, and to be able to complete that transaction really quickly without having to fill out printed forms or Excel spreadsheets and emailing details to place an order is now really important.”
Why off-the-shelf solutions make the most sense
Many companies that are looking for ways to quickly digitise customer engagement and ordering processes are making an expensive, time-consuming mistake. Often FMCG companies are opting to use a basic e-commerce add-on to their ERP, or even build their own e-commerce platform, at best having a limited e-commerce offering that fails to convert customers, and at worst inheriting a large amount of costly technical debt that doesn’t meet requirements.
Rigby works in Adobe’s Experience Cloud division which creates and supplies technologies for enterprise businesses – including FMCG companies that want to understand the behaviour of their customers.
Adobe offers a full enterprise-grade content management solution encompassing platforms including websites, mobile applications and digital screens. That, combined with his experience working alongside many multinational FMCG companies deploying Adobe’s solutions, gives Rigby a unique insight into the challenges such businesses are facing in the increasingly digital era.
Rigby advises companies that trying to mix and match technology solutions is “fraught with danger” – and that most FMCG companies lack the technical expertise in-house to turn their direct-to-consumer vision into reality.
Beyond the risk of incompatibility, adopting an off-the-shelf solution is more easily budgeted and planned for.
“If you are contracting for a three-year term, you know exactly what you are getting. But you don’t know what you’re getting when you try and create something from the ground up. Alternatively, if you’re trying to pull a number of different technologies together, you might suddenly find the integration isn’t great and you need to undertake additional development to make it all work.”
Similarly, large companies with large IT teams might opt to build solutions instead of buying solutions that are readily available. “There is a risk with that,” he says. “First and foremost, you’re building something that is not your technical competency. So it might be 12 or 18 months before it is ready to deploy. By then the world has moved on. Your competitors that chose to use the off-the-shelf technology have left you behind.”
The risk of failure
He says the biggest risk is that most projects fail – and manufacturers are probably not going to get the result they want. “Are you really willing to create a solution in-house to try to save maybe $10,000 or even $100,000 and put the rest of your business at risk? Or are you better off taking something off the shelf today that will deliver a return on your investment, most likely within a couple of months?”
The argument becomes even more compelling when you consider the growing role of artificial intelligence (AI) in business. Off-the-shelf solutions are already incorporating AI features. Adobe, for example, has been developing and building AI into its software for the past 15 years.
“Trying to build that technical competency in-house is going to be challenging. If you create a custom platform, then you’re effectively going to have to create your own AI as well.”
AI works best when it can use data together to detect patterns and build recommendations to engage customers and drive sales. A large volume of good quality data delivers the best algorithm to work out the next thing a company should put in front of the customer, says Rigby.
“If you build a custom platform or you create this Frankenstein of platforms, then your data is in disparate silos, so AI won’t be able to build the best algorithms. Yet platform technologies come with multiple algorithms out of the box.
Security and regulatory compliance
Rigby says security should be another major factor in deciding between building in-house solutions or buying off the shelf – a factor and overhead that many companies fail to consider.
Security is much more than just the robustness of the solution and its resistance to hacks and external threats. Compliance is just as critical with regulations evolving globally.
“That is another overhead that you will have to manage in-house. There is GDPR for Europe, and the US has its own data regulations, California as a state has its own and so on.
“You can only manage that through technology. If you’re a business and this is not your core capability and you have created your own Frankenstein – or you create a customer platform with a multitude of vendors – the security between those different integrations is another concern that you’re going to have to manage.”
Finally, don’t believe the false narrative that your custom-built website will allow you to get to market faster, warns Rigby.
“Proponents of customised solutions will often argue that the speed to market is quicker for what they have versus off-the-shelf solutions. I think that is an entirely false narrative. If you have to create something from the ground up and plug it all together, that will hold you back. In particular, if you’re building your own bespoke solution internally with your own IT development team, you are going to lose time getting to market while you are learning how it all works together.
“Most businesses don’t have the maturity or the technical strength to be able to manage custom or what we call organically built technology. So it is fraught with danger trying to do it on your own.”
Discover more about how Adobe’s solutions can aid your retail business here.
